New tax arrangements could hit the supply of temporary workers in a range of sectors, according to one industry body.
Analysis by the Recruitment & Employment Confederation (REC) shows that government plans to charge VAT on the wages of temporary staff will increase the cost of supplying employees by £400 million.
Anne Fairweather, head of public policy at the REC, believes the move could affect small firms in a number of sectors.
She said: "This will have a dramatic impact on the supply of staff to work with some of the most vulnerable in society.
"The removal of the concession will also reduce flexible working opportunities in the financial services sector at a time when it is under great strain."
Areas that the change will have an impact on include health care, charities, social housing, further education and financial services, she added.
Yesterday, July's Report on Jobs, issued by KPMG and the REC revealed that the rate of growth for temporary appointments is at its lowest level in five years.
